the price elasticity of supply?

Question

How do you explain the price elasticity of supply for the industry of gasoline?

Answer 1

Correct me if i am wrong. Price elasticity will occurred when the resources are able to be substituted. However, can oil and gas be substituted is another question of the future aspects. When resources are scarce and there is no replacement of such items, it will create an inelastic prices for such resources.

However, the gasoline prices are still cheap compare to a gallon of coke that we consume. Till there is a new technology unveiled that will be able to fully substitute gasoline, then the price will be elastic.

Answer 2

Supplies of anything are never as elastic as demand. Demand, Supply and Price are all related. Global output of crude for gasoline is stretched pretty tight already. As the price increases more is available. It becomes economically feasible to recover oil from wells at $75 or $80 per barrel that are not worth messing with at $25 per barrel.

But if you don't allow price to increase that oil will not be available. You can also assume that as the price increases demand will be reduced, either by conservation, or replacement with alternative fuels.

I don't know how much it cost to drill an oil well, but a gas well cost in the order of $1,000,000. Of course not 100% of these wells actually wind up producing. But if the price increases more money can be risked drilling wells.because even if the percentage of wells that hit and produce is reduced the higher price will allow the cost to be recovered.

So there is some elasticity in the supply of gasoline as well. Another factor reduces this elasticity is the EPA required special blends which tie up the refining capacity during the summer months each year, causing an EPA induced supply bottle neck. There's plenty of refining capacity during most of the year, its just the Heinz 57 varieties, caused by senseless regulation that cause the summertime price spike in gasoline.

Answer 3

Elasticity is the measure of the responsiveness of a commodity to a change in price.

The price elasticity of a good characterizes the good. If a particular commodity is what we call a "basic" need, it tends to be inelastic. This means that a 1% change in the price of the commodity will create a less than 1% change in the quantity demanded for that good. On the other hand, if a good is inferior, it tends to be more elastic or in other words more responsive to the price changes.

With regards to the oil industry, oil as a commodity is highly values in terms of its application but its supply is limited. Since the supply of such a good is limited, sellers, do not act as if they are in a "perfectly competitive market" or as price takers. Sellers of such commodities become dictators of price.

And since oil is regarded as a more or less basic good, it is inelastic or is unresponsive to price change.

Answer 4

For consumables such as table salt, batteries, etc consmers have little brand preference and are thus likely to switch brands in the event of a price increase.

I believe that for commodities such as oil, and gas etc, the price isn't very elastic because the commodity is scarce.

Answer 5

There is no price elasticity (in the short run, anyway). The industry is full of bottlenecks (development timelines, pipeline capacities, ocean shipping and related scheduling problems, oil terminal capacities, refining capacities, etc.) It literally takes the industry years to respond to rising prices...

Answer 6

Politics!

Answer 7

in wa state its $3.06 for a gallon!

Answer 8

your gay!!!!!! lolololololololol